Survival of obligations: Overview, definition, and example
What is survival of obligations?
Survival of obligations refers to the continuation of certain obligations and responsibilities outlined in a contract even after the contract has ended or is terminated. These obligations "survive" the termination or expiration of the agreement and remain enforceable beyond the contract's completion. Common obligations that survive the termination of a contract include confidentiality, indemnity, and liability provisions, as these may need to be upheld even after the primary contract has concluded.
For example, a business contract might specify that certain confidentiality requirements or indemnity provisions will continue to apply even after the contract ends.
Why is survival of obligations important?
Survival of obligations is important because it ensures that essential terms of the contract that protect the parties, such as confidentiality, non-compete, or indemnity clauses, remain enforceable after the main obligations have been fulfilled or the agreement has expired. It allows businesses to maintain critical protections after a contract’s termination, especially when issues such as liabilities, disputes, or confidentiality might arise long after the contract has ended.
For businesses, ensuring that the right obligations survive contract termination is crucial for ongoing legal protection and risk management.
Understanding survival of obligations through an example
Imagine a company enters into an agreement with a supplier to purchase goods over a two-year period. The contract includes a confidentiality provision that requires the supplier to keep the company’s trade secrets private. Even after the contract ends, the confidentiality obligation survives, meaning the supplier is still legally bound to protect the company’s sensitive information.
In another example, a business that enters into a partnership agreement may include an indemnity clause that survives the termination of the partnership. This ensures that, even after the partnership ends, one partner may still be responsible for any liabilities or claims arising from actions taken during the partnership.
An example of a survival of obligations clause
Here’s how a survival of obligations clause might look in a contract:
“The Parties agree that the obligations under Sections [Insert Sections] of this Agreement, including but not limited to confidentiality, indemnity, and dispute resolution, shall survive the termination or expiration of this Agreement and remain in full force and effect thereafter.”
Conclusion
Survival of obligations is a critical concept in contract law, ensuring that certain terms and protections remain enforceable after the contract has ended or been terminated. It is important for businesses to carefully consider which obligations should survive termination to protect their interests, especially regarding confidentiality, indemnity, and liabilities.
For businesses, including clear survival of obligations clauses in contracts helps to safeguard critical rights and responsibilities beyond the term of the agreement, reducing potential risks and providing continued protection.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.